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ScribeBy: Arlie Porter and Allison Bruce of The Post and
Courier Staff
Originally Published on: 4/16/03
In an effort to prevent Charleston County Council from raising taxes on most homeowners this year, the county school board has voted to join North Charleston in a lawsuit challenging the county's reassessment cap.
Kiawah Island on the other hand -- where most residential and commercial property owners would benefit from the cap -- has joined Charleston County in defending the cap before the South Carolina Supreme Court.
Besides illustrating the wide difference of opinion over the controversial reassessment cap, the actions in recent days further Balkanize local governments into camps of opposing lawyers working at taxpayers' expense.
Kiawah's expenses are expected to range from $100,000 to $200,000. With a team of four lawyers, Charleston County has likely spent more than $100,000 defending a cap in the past three years, although county officials say they haven't estimated the expense.
North Charleston's attorney estimated his bill would range between $7,500 and $10,000. The school district's attorney guessed the cost to the district at "several thousand dollars."
More than a legal argument, the school board's decision appears to be an attempt to avoid public blame for a tax increase by pinning the increase on council -- months before tax bills are mailed.
With the cap, which council has voted to put in place this year, the owners of 82,000 residential and commercial properties will pay higher taxes, while 53,000 will pay less. In effect, the cap shifts the property tax burden from commercial and residential properties that have increased substantially in value in recent years to all other properties.
If the school board were to pass a $242 million budget -- the same amount as last year's budget -- there would actually be a tax decrease without the reassessment cap. But with the cap, taxes will substantially increase, according to Jerry Hartley, the school district's executive director of business services.
At the current budget, the owner of an average $169,635 home in Charleston County would be taxed $414.60 to run county schools. That would be about $6.65 less than last year's tax bill, according to Hartley.
With the reassessment cap, however, he estimated the tax bill for the same home would be $573.39 to run schools, or $152.14 more than last year's bill. "If that doesn't clearly indicate that the tax increase is driven by the action of County Council, then nothing will," Hartley said.
Hartley called the cap "Robin Hood in reverse," taking money from low and middle-income families to cover the taxes that would not be paid by owners of expensive properties.
"They're going to force not only the school district but every local government in Charleston County to have to increase their taxes accordingly in order to generate even the same amount of money they had the previous year," he said.
County Council Chairman Tim Scott said Hartley's argument is flawed.
While some homeowners will pay less with the cap and some will pay more, the cap itself doesn't generate additional revenue to run local governments. Therefore, it doesn't represent a tax increase, he said.
If the school district increased its budget, however, as it did by a whopping margin last year, then that constitutes a tax increase, he said.
Hartley's blaming council for a tax increase, when it's the school district that sets the budget, "is absolute hogwash," Scott said. "To infuse the public with misinformation is at best misguided, and at worst, ludicrous."
Schools may need more money to operate, but it's not because of the cap, he said.
The bickering among the school district and county fell on the eve of a public forum scheduled tonight on property taxes, at which the cap and its effects are expected to be debated.
Among the speakers is Charles-ton Mayor Joseph P. Riley Jr., who on Tuesday said council should postpone the cap until the Supreme Court decides if it's legal. While he supports the cap to offset higher taxes on soaring property values, local governments would be thrown into turmoil if the Supreme Court rules the tax method illegal, Riley said.
Kiawah Island property owners, faced with the doubling or tripling of property values in the 1990s, could get tax breaks in the tens of thousands of dollars with the cap. With millions of dollars at stake across the town, its council has hired Charleston Attorney Gedney Howe to help the county defend the cap.
It's unfair that Kiawah Island residents get saddled with huge tax increases, nor know what those taxes will be from year to year, said Mayor Bill Wert.
But North Charleston Attorney Brady Hair said it's unfair that North Charleston residents will have to pay higher taxes so that Kiawah Island property owners get a tax break.
It's not clear when the Supreme Court will rule on the cap.
CHARLESTON COUNTY TAX Q & A
WHAT IS THE REASSESSMENT CAP?
A change in how real estate is taxed to fund the cost of running local governments. By state law, property is taxed at its full value. With a cap, increases in taxable property values of residential and commercial property are limited to 15 percent.
HOW WOULD IT WORK?
With a cap, a house worth $100,000 in 1993 that increased in value to $200,000 in 2000 would not be taxed at its full value of $200,000. Instead, it would be taxed at 15 percent more than the 1993 value, or $115,000. In effect, $85,000 of the house's value would be exempt from property taxes.
Because taxable property values countywide are lower with the cap, local governments charge a higher tax rate in order to raise the same amount of revenue to operate. This is why most homeowners would pay higher taxes next year with the cap.
WHAT EFFECT WOULD IT HAVE?
The higher the increase in property value, the greater the tax break; this is why the cap is supported in areas such as Kiawah and Seabrook islands, the Isle of Palms, Sullivan's Island, Folly Beach and downtown Charleston, where property values have gone up sharply.
Because residential and commercial properties in these areas would get tax breaks, the tax burden would shift to all other property owners, including in North Charleston.
In all, the owners of 82,000 residential and commercial properties would pay higher taxes this year because of the cap, according to county figures. About 53,000 would pay less. Taxes on all cars would be higher with the cap.
WHAT IS THE CAP'S STATUS?
Charleston County Council has approved it, but the cap faces a legal challenge from the city of North Charleston and the Charleston County School Board. Many lawyers do not believe the S.C. Supreme Court will rule on the cap's legality until after mid-July when the cap is programmed into tax bills that the county is scheduled to mail in late September. The court, however, could halt the mailing of bills with the cap until it rules on whether the cap is legal.
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